Interim Rules of Intra-Corporate Disputes

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01-2-04-SC, March 13, 2001 ]
EN BANC
[ A.M. No. 01-2-04-SC, March 13, 2001 ]
Re: INTERIM RULES OF PROCEDURE GOVERNING INTRA-
CORPORATE CONTROVERSIES UNDER R.A. NO. 8799
RESOLUTION
Acting on the Memorandum of the Committee on SEC Cases submitting for this Court's
consideration and approval the Proposed Interim Rules of Procedure for Intra-Corporate
Controversies, the Court Resolved to APPROVE the same.
The Interim Rules shall take effect on April 1, 2001 following its publication in two (2)
newspapers of general circulation.
March 13, 2001, Manila
(Sgd.) HILARIO G. DAVIDE, JR.

Chief Justice
(Sgd.) JOSUE N. BELLOSILLO (Sgd.) JOSE A.R. MELO

Associate Justice Associate Justice
(Sgd.) REYNATO S. PUNO (Sgd.) JOSE C. VITUG

(Sgd.) SANTIAGO M. KAPUNAN (Sgd.) VICENTE V. MENDOZA

(Sgd.) ARTEMIO V. PANGANIBAN (Sgd.) LEONARDO A. QUISUMBING

(Sgd.) BERNARDO P. PARDO (Sgd.) ARTURO B. BUENA

(Sgd.) MINERVA P. GONZAGA-REYES (Sgd.) CONSUELO YNARES-SANTIAGO

elibrary.judiciary.gov.ph/elibsearch 1/20
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(Sgd.) ANGELINA SANDOVAL-

(Sgd.) SABINO R. DE LEON, JR. GUTIERREZ
INTERIM RULES OF PROCEDURE FOR

INTRA-CORPORATE CONTROVERSIES
RULE I
GENERAL PROVISIONS
SECTION 1. (a) Cases covered. - These Rules shall govern the procedure be observed in civil
cases involving the following:
(1) Devices or schemes employed by, or any act of, the board of directors, business
associates, officers or partners, amounting to fraud or misrepresentation which may
be detrimental to the interest of the public and/or of the stockholders, partners, or
members of any corporation, partnership, or association;
(2) Controversies arising out of intra-corporate, partnership, or association relations,

between and among stockholders, members, or associates; and between, any or all of
them and the corporation, partnership, or association of which they are stockholders,
members, or associates, respectively;
(3) Controversies in the election or appointment of directors, trustees, officers, or

managers of corporations, partnerships, or associations;
(4) Derivative suits; and
(5) Inspection of corporate books.
(b) Prohibition against nuisance and harassment suits. - Nuisance and harassment
suits are prohibited. In determining whether a suit is a nuisance or harassment suit,
the court shall consider, among others, the following:
(1) The extent of the shareholding or interest of the initiating stockholder

or member;
(2) Subject matter of the suit;
(3) Legal and factual basis of the complaint;
(4) Availability of appraisal rights for the act or acts complained of; and
(5) Prejudice or damage to the corporation, partnership, or association in

relation to the relief sought.
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In case of nuisance or harassment suits, the court may, motu proprio or upon motion, forthwith
dismiss the case.
SEC. 2. Suppletory application of the Rules of Court. — The Rules of Court, in so far as they
may be applicable and are not inconsistent with these Rules, are hereby adopted to form an
integral part of these Rules.
SEC. 3. Construction. — These Rules shall be liberally construed in order to promote their
objective of securing a just, summary, speedy and inexpensive determination of every action or
proceeding.
SEC. 4. Executory nature of decisions and orders.— All decisions and orders issued under these
Rules shall immediately be executory. No appeal or petition taken therefrom shall stay the
enforcement or implementation of the decision or order, unless restrained by an appellate court.
Interlocutory orders shall not be subject to appeal.
SEC 5. Venue. — All actions covered by these Rules shall be commenced and tried in the
Regional Trial Court which has jurisdiction over the principal office of the corporation,
partnership, or association concerned. Where the principal office of the corporation, partnership
or association is registered in the Securities and Exchange Commission as Metro Manila, the
action must be filed in the city or municipality where the head office is located.
SEC. 6. Service of pleadings.— When so authorized by the court, any pleading and/or document
required by these Rules may be filed with the court and/or served upon the other parties by
facsimile transmission (fax) or electronic mail (e-mail). In such cases, the date of transmission
shall be deemed to be prima facie the date of service.
SEC. 7. Signing of pleadings, motions and other papers.— Every pleading, motion, and other
paper of a party represented by an attorney shall be signed by at least one attorney of record in
the attorney's individual name, whose address shall be stated. A party who is not represented by
an attorney shall sign the pleading, motion, or other paper and state his address.
The signature of an attorney or party constitutes a certification by the signer that he has read the
pleading, motion, or other paper; that to the best of his knowledge, information, and belief
formed after reasonable inquiry, it is well grounded in fact and is warranted by existing law or a
good faith argument for the extension, modification, or reversal of existing jurisprudence; and
that it is not interposed for any improper purpose, such as to harass or to cause unnecessary
delay or needless increase in the cost of litigation.
If a pleading, motion, or other paper is not signed, it shall be stricken off the record unless it is
promptly signed by the pleader or movant, after he is notified of the omission.
SEC 8. Prohibited pleadings. — The following pleadings are prohibited:
(1) Motion to dismiss;
(2) Motion for a bill of particulars;
(3) Motion for new trial, or for reconsideration of judgment or order, or for re-
opening of trial;
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(4) Motion for extension of time to file pleadings, affidavits or any other paper,
except those filed due to clearly compelling reasons. Such motion must be verified
and under oath; and
(5) Motion for postponement and other motions of similar intent, except those filed
due to clearly compelling reasons. Such motion must be verified and under oath.
SEC 9. Assignment of cases. — All cases filed under these Rules shall be tried by judges
designated by the Supreme Court to hear and decide cases transferred from the Securities and
Exchange Commission to the Regional Trial Courts and filed directly with said courts pursuant
to Republic Act No. 8799, otherwise known as the Securities and Regulation Code.
RULE 2
COMMENCEMENT OF ACTION AND PLEADINGS
SECTION 1. Commencement of action. — An action under these Rules is commenced by the

filing of a verified complaint with the proper Regional Trial Court.
SEC. 2. Pleadings allowed. — The only pleadings allowed to be filed under these Rules are the
complaint, answer, compulsory counterclaims or cross-claims pleaded in the answer, and the
answer to the counterclaims or cross-claims.
SEC. 3. Verification. — The complaint and the answer shall be verified by an affidavit stating
that the affiant has read the pleading and the allegations therein are true and correct based on his
own personal knowledge or on authentic records.
SEC. 4. Complaint. — The complaint shall state or contain:
(1) the names, addresses, and other relevant personal or juridical circumstances of
the parties;
(2) all facts material and relevant to the plaintiffs cause or causes of action, which
shall be supported by affidavits of the plaintiff or his witnesses and copies of
documentary and other evidence supportive of such cause or causes of action;
(3) the law, rule, or regulation relied upon, violated, or sought to be enforced;
(4) a certification that (a) the plaintiff has not theretofore commenced any action or
filed any claim involving the same issues in any court, tribunal or quasi-judicial
agency, and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other action or claim, a complete statement of the present
status thereof; and (c) if he should thereafter learn that the same or similar action or
claim has been filed or is pending, he shall report that fact within five (5) days
therefrom to the court; and
(5) the relief sought.
SEC. 5. Summons. — The summons and the complaint shall be served together not later than
five (5) days from the date of filing of the complaint.
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(a) Service upon domestic private juridical entities. — If the defendant is a domestic
corporation, service shall be deemed adequate if made upon any of the statutory or
corporate officers as fixed by the by-laws or their respective secretaries. If the
defendant is a partnership, service shall be deemed adequate if made upon any of the
managing or general partners or upon their respective secretaries. If the defendant is
an association, service shall be deemed adequate if made upon any of its officers or
their respective secretaries.
(b) Service upon foreign private juridical entity. — When the defendant is a foreign
private juridical entity which is transacting or has transacted business in the
Philippines, service may be made on its resident agent designated in accordance with
law for that purpose, or, if there be no such agent, on the government official
designated by law to that effect, or on any of its officers or agents within the
Philippines.
SEC. 6. Answer. - The defendant shall file his answer to the complaint, serving a copy thereof
on the plaintiff, within fifteen (15) days from service of summons.
In the answer, the defendant shall:
(1) Specify each material allegation of fact the truth of which he admits;
(2) Specify each material allegation of fact the truth of which he does not admit.
Where the defendant desires to deny only a part of an averment, he shall specify so
much of it as true and material and shall deny only the remainder;
(3) Specify each material allegation of fact as to which truth he has no knowledge or
information sufficient to form a belief, and this shall have the effect of a denial;
(4) State the defenses, including grounds for a motion to dismiss under the Rules of
Court;
(5) State the law, rule, or regulation relied upon;
(6) Address each of the causes of action stated in the complaint;
(7)State the facts upon which he relies for his defense, including affidavits of
witnesses and copies of documentary and other evidence supportive of such cause or
causes of action;
(8) State any compulsory counterclaim/s and cross-claim/s; and
(9) State the relief sought.
The answer to counterclaims or cross-claims shall be filed within ten (10) days from service of
the answer in which they are pleaded.
SEC 7. Effect of failure to answer. — If the defendant fails to answer within the period above
provided, he shall be considered in default. Upon motion or motu proprio, the court shall render
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judgment either dismissing the complaint or granting the relief prayed for as the records may
warrant. In no case shall the court award a relief beyond or different from that prayed for.
SEC. 8. Affidavits, documentary and other evidence. — Affidavits shall be based on personal
knowledge, shall set forth such facts as would be admissible in evidence, and shall show
affirmatively that the affiant is competent to testify on the matters stated therein. The affidavits
shall be in question and answer form, and shall comply with the rules on admissibility of
evidence.
Affidavits of witnesses as well as documentary and other evidence shall be attached to the
appropriate pleading; Provided, however, that affidavits, documentary and other evidence not so
submitted may be attached to the pre-trial brief required under these Rules. Affidavits and other
evidence not so submitted shall not be admitted in evidence, except in the following cases:
(1.) Testimony of unwilling, hostile, or adverse party witnesses. A witness is

presumed prima facie hostile if he fails or refuses to execute an affidavit after a
written request therefor;
(2) If the failure to submit the evidence is for meritorious and compelling reasons;
and
(3) Newly discovered evidence.
In case of (2) and (3) above, the affidavit and evidence must be submitted not later than five (5)
days prior to its introduction in evidence.
RULE 3
MODES OF DISCOVERY
SECTION 1. In general. - A party can only avail of any of the modes of discovery not later than
fifteen (15) days from the joinder of issues.
SEC. 2. Objections. - Any mode of discovery such as interrogatories, request for admission,
production or inspection of documents or things, may be objected to within ten (10) days from
receipt of the discovery device and only on the ground that the matter requested is patently
incompetent, immaterial, irrelevant or privileged in nature.
The court shall rule on the objections not later than fifteen (15) days from the filing thereof.
SEC. 3. Compliance. - Compliance with any mode of discovery shall be made within ten (10)
days from receipt of the discovery device, or if there are objections, from receipt of the ruling of
the court.
SEC. 4. Sanctions. - The sanctions prescribed in the Rules of Court for failure to avail of, or
refusal to comply with, the modes of discovery shall apply. In addition, the court may, upon
motion, declare a party non-suited or as in default, as the case may be, if the refusal to comply
with a mode of discovery is patently unjustified.
RULE 4
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PRE-TRIAL
SECTION 1. Pre-trial conference; mandatory nature. — Within five (5) days after the period for
availment of, and compliance with, the modes of discovery prescribed in Rule 3 hereof,
whichever comes later, the court shall issue and serve an order immediately setting the case for
pre-trial conference and directing the parties to submit their respective pre-trial-briefs. The
parties shall file with the court and furnish each other copies of their respective pre-trial brief in
such manner as to ensure its receipt by the court and the other party at least five (5) days before
the date set for the pre-trial.
The parties shall set forth in their pre-trial briefs, among other matters, the following:
(1) Brief statement of the nature of the case, which shall summarize the theory or
theories of the party in clear and concise language;
(2) Allegations expressly admitted, by either or both parties;
(3) Allegations deemed admitted by either or both parties;
(4) Documents not specifically denied under oath by either or both parties;
(5) Amendments to the pleadings;
(6) Statement of the issues, which shall separately summarize the factual and legal
issues involved in the case;
(7) Names of witnesses to be presented and the summary of their testimony as

contained in their affidavits supporting their positions on each of the issues;
(8) All other pieces of evidence, whether documentary or otherwise and their
respective purposes;
(9) Specific proposals for an amicable settlement;
(10) Possibility of referral to mediation or other alternative modes of dispute

resolution;
(11) Proposed schedule of hearings; and
(12) Such other matters as may aid in the just and speedy disposition of the case.
SEC. 2. Nature and purpose of pre-trial conference. — During the pre-trial conference, the court
shall, with its active participation, ensure that the parties consider in detail all of the following:
(1) The possibility of an amicable settlement;
(2) Referral of the dispute to mediation or other forms of dispute resolution;
(3) Facts that need not be proven, either because they are matters of judicial notice or
expressly or deemed admitted;
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(4) Amendments to the pleadings;
(5) The possibility of obtaining stipulations and admissions of facts and documents;
(6) Objections to the admissibility of testimonial documentary and other evidence;
(7) Objections to the form or substance of any affidavit, or part thereof;
(8) Simplification of the issues;
(9) The possibility of submitting the case for decision on the basis of position papers,
affidavits, documentary and real evidence;
(10) A complete schedule of hearing dates; and
(11) Such other matters as may aid in the speedy and summary disposition of the
case.
SEC. 3. Termination. — The preliminary conference shall be terminated not later than ten (10)
days after its commencement, whether or not the parties have agreed to settle amicably.
SEC. 4. Judgment before pre-trial. — If, after submission of the pre-trial briefs, the court
determines that, upon consideration of the pleadings, the affidavits and other evidence submitted
by the parties, a judgment may be rendered, the court may order the parties to file
simultaneously their respective memoranda within a non-extendible period of twenty (20) days
from receipt of the order. Thereafter, the court shall render judgment, either full or otherwise,
not later than ninety (90) days from the expiration of the period to file the memoranda.
SEC. 5. Pre-trial order; judgment after pre-trial. — The proceedings in the pre-trial shall be
recorded. Within ten (10) days after the termination of the pre-trial, the court shall issue an order
which shall recite in detail the matters taken up in the conference, the actions taken thereon, the
amendments allowed in the pleadings, and the agreements or admissions made by the parties as
to any of the matters considered. The court shall rule on all objections to or comments on the
admissibility of any documentary or other evidence, including any affidavit or any part thereof.
Should the action proceed to trial, the order shall explicitly define and limit the issues to be tried
and shall strictly follow the form set forth in Annex "A" of these Rules.
The contents of the order shall control the subsequent course of the action, unless modified
before trial to prevent manifest injustice.
After the pre-trial, the court may render judgment, either full or partial, as the evidence
presented during the pre-trial may warrant.
RULE 5
TRIAL
SECTION 1. Witnesses. — If the court deems necessary to hold hearings to determine specific
factual matters before rendering judgment, it shall, in the pre-trial order, set the case for trial on
the dates agreed upon by the parties.
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Only persons whose affidavits were submitted may be presented as witnesses, except in cases
specified in section 8, Rule 2 of these Rules. The affidavits of the witnesses shall serve as their
direct testimonies, subject, to cross-examination in accordance with existing rules on evidence.
SEC. 2. Trial schedule. — Unless judgment is rendered pursuant to Rule 4 of these Rules, the
initial hearing shall be held not later than thirty (30) days from the date of the pre-trial order.
The hearings shall be completed not later than sixty (60) days from the date of the initial
hearing, thirty (30) days of which shall be allotted to the plaintiffs and thirty (30) days to the
defendants in the manner prescribed in the pre-trial order. The failure of a party to present a
witness on a scheduled hearing date shall be deemed a waiver of such hearing date. However, a
party may present such witness or witnesses within his remaining allotted hearing dates.
SEC. 3. Written offer of evidence. — Evidence not otherwise admitted by the parties or ruled
upon by the court during the pre-trial conference shall be offered in writing not later than five
(5) days from the completion of the presentation of evidence of the party concerned. The
opposing party shall have five (5) days from receipt of the offer to file his comments or
objections. The court shall make its ruling on the offer within five (5) days from the expiration
of the period to file comments or objections.
SEC. 4. Memoranda. — Immediately after ruling on the last offer of evidence, the court shall
order the parties to simultaneously file, within thirty (30) days from receipt of the order, their
respective memoranda. The memoranda shall contain the following:
(1) A "Statement of the Case," which is a clear and concise statement of the nature of
the action and a summary of the proceedings;
(2) A "Statement of the Facts," which is a clear and concise statement in narrative
form of the established facts, with reference to the testimonial, documentary or other
evidence in support thereof;
(3) A "Statement of the Issues," which is a clear and concise statement of the issues
presented to the court for resolution;
(4) The "Arguments," which is a clear and concise presentation of the argument in
support of each issue; and
(5) The "Relief," which is a specification of the order or judgment which the party
seeks to obtain.
No reply memorandum shall be allowed.
SEC. 5. Decision after trial. — The court shall render a decision not later than (90) days from
the lapse of the period to file the memoranda, with or without said pleading having been filed.
RULE 6
ELECTION CONTESTS
SECTION 1. Cases covered. — The provisions of this rule shall apply to election contests in
stock and non-stock corporations.
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SEC. 2. Definition. — An election contest refers to any controversy or dispute involving title or
claim to any elective office in a stock or non-stock corporation, the validation of proxies, the
manner and validity of elections, and the qualifications of candidates, including the
proclamation of winners, to the office of director, trustee or other officer directly elected by the
stockholders in a close corporation or by members of a non-stock corporation where the articles
of incorporation or by-laws so provide.
SEC. 3. Complaint. — In addition to the requirements in section 4, Rule 2 of these Rules, the
complaint in an election contest must state the following:
(1) The case was filed within fifteen (15) days from the date of the election if the by-
laws of the corporation do not provide for a procedure for resolution of the
controversy, or within fifteen (15) days from the resolution of the controversy by the
corporation as provided in its by-laws; and
(2) The plaintiff has exhausted all intra-corporate remedies in election cases as
provided for in the by-laws of the corporation.
SEC. 4. Duty of the court upon the filing of the complaint. — Within two (2) days from the filing
of the complaint, the court, upon a consideration of the allegations thereof, may dismiss the
complaint outright if it is not sufficient in form and substance, or, if it is sufficient, order the
issuance of summons which shall be served, together with a copy of the complaint, on the
defendant within two (2) days from its issuance.
SEC. 5. Answer. — The defendant shall file his answer to the complaint, serving a copy thereof
on the plaintiff, within ten (10) days from service of summons and the complaint. The answer
shall contain the matters required in section 6, Rule 2 of these Rules.
SEC. 6. Affidavits, documentary and other evidence. — The parties shall attach to the complaint
and answer the affidavits of witnesses, documentary and other evidence in support thereof, if
any.
SEC. 7. Effect of failure to answer. — If the defendant fails to file an answer within the period
above provided, the court shall, within ten (10) days from the lapse of said period, motu proprio
or on motion, render judgment as may be warranted by the allegations of the complaint, as well
as the affidavits, documentary and other evidence on record. In no case shall the court award a
relief beyond or different from that prayed for.
SEC. 8. Trial. — If the court deems it necessary to hold a hearing to clarify specific factual
matters before rendering judgment, it shall, within ten (10) days from the filing of the last
pleading, issue an order setting the case for hearing for the purpose. The order shall, in clear and
concise terms, specify the factual matters the court desires to be clarified and the witnesses,
whose affidavits have been submitted, who will give the necessary clarification.
The hearing shall be set on a date not later than ten (10) days from the date of the order, and
shall be completed not later than fifteen (15) days from the date of the first hearing. The
affidavit of a witness who fails to appear for clarificatoiy questions of the court shall be ordered
stricken off the record.
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SEC 9. Decision. — The Court shall render a decision within fifteen days from receipt of the last
pleading, or from the date of the last hearing as the case may be. The decision shall be based on
the pleadings, affidavits, documentary and other evidence attached thereto and the answers of
the witnesses to the clarificatory questions of the court given during the hearings.
RULE 7
INSPECTION OF CORPORATE BOOKS AND RECORDS
SECTION 1. Cases covered. — The provisions of this Rule shall apply to disputes exclusively
involving the rights of stockholders or members to inspect the books and records and/or to be
furnished with the financial statements of a corporation, under sections 74 and 75 of Batas
Pambansa Blg. 68, otherwise known as the Corporation Code of the Philippines.
SEC. 2. Complaint. — In addition to the requirements in section 4, Rule 2 of these Rules, the
complaint must state the following:
(1) The case is for the enforcement of plaintiff's right of inspection of corporate
orders or records and/or to be furnished with financial statements under sections 74
and 15 of the Corporation Code of the Philippines;
(2) A demand for inspection and copying of books and records and/or to be furnished
with financial statements made by the plaintiff upon defendant;
(3) The refusal of defendant to grant the demands of the plaintiff and the reasons
given for such refusal, if any; and
(4) The reasons why the refusal of defendant to grant the demands of the plaintiff is
unjustified and illegal, stating the law and jurisprudence in support thereof.
SEC. 3. Duty of the court upon the filing of the complaint. — Within two (2) days from the filing
of the complaint, the court, upon a consideration of the allegations thereof, may dismiss the
complaint outright if it is not sufficient in form and substance, or, if it is sufficient, order the
issuance of summons which shall be served, together with a copy of the complaint, on the
defendant within two (2) days from its issuance.
SEC. 4. Answer. — The defendant shall file his answer to the complaint, serving a copy thereof
on the plaintiff, within ten (10) days from service of summons and the complaint. In addition to
the requirements in section 6, Rule 2 of these Rules, the answer must state the following:
(1) The grounds for the refusal of defendant to grant the demands of the plaintiff,
stating the law and jurisprudence in support thereof;
(2) The conditions or limitations on the exercise of the right to inspect which should
be imposed by the court; and
(3) The cost of inspection, including manpower and photocopying expenses, if the
right to inspect is granted.
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SEC. 5. Affidavits, documentary and other evidence. — The parties shall attach to the complaint
and answer the affidavits of witnesses, documentary and other evidence in support thereof, if
any.
SEC. 6. Effect of failure to answer. — If the defendant fails to file an answer within the period
above provided, the court, within ten (10) days from the lapse of the said period, motu proprio
or upon motion, shall render judgment as warranted by the allegations of the complaint, as well
as the affidavits, documentary and other evidence on record. In no case shall the court award a
relief beyond or different from that prayed for.
SEC. 7. Decision. — The court shall render a decision based on the pleadings, affidavits and
documentary and other evidence attached thereto within fifteen (15) days from receipt of the last
pleading. A decision ordering defendants to allow the inspection of books and records and/or to
furnish copies thereof shall also order the plaintiff to deposit the estimated cost of the manpower
necessary to produce the books and records and the cost of copying, and state, in clear and
categorical terms, the limitations and conditions to the exercise of the right allowed or enforced.
RULE 8
DERIVATIVE SUITS
SECTION 1. Derivative action. — A stockholder or member may bring an action in the name of
a corporation or association, as the case may be, provided, that:
(1) He was a stockholder or member at the time the acts or transactions subject of the
action occurred and at the time the action was filed;
(2) He exerted all reasonable efforts, and alleges the same with particularity in the
complaint, to exhaust all remedies available under the articles of incorporation, by-
laws, laws or rules governing the corporation or partnership to obtain the relief he
desires;
(3) No appraisal rights are available for the act or acts complained of; and
(4) The suit is not a nuisance or harassment suit.
In case of nuisance or harassment suit, the court shall forthwith dismiss the case.
SEC 2. Discontinuance. — A derivative action shall not be discontinued, compromised or

settled without approval of the court. During the pendency of the action, any sale of shares of
the complaining stockholder shall be approved by the court. If the court determines that the
interest of the stockholders or members will be substantially affected by the discontinuance,
compromise or settlement, the court may direct that notice, by publication or otherwise, be given
to the stockholders or members whose interests it determines will be so affected.
RULE 9
MANAGEMENT COMMITTEE
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SECTION 1. Creation of a management committee. — As an incident to any of the cases filed

under these Rules or the Interim Rules on Corporate Rehabilitation, a party may apply for the
appointment of a management committee for the corporation, partnership or association, when
there is imminent danger of:
(1) Dissipation, loss, wastage or destruction of assets or other properties; and
(2) Paralyzation of its business operations which may be prejudicial to the interest of
the minority stockholders, parties-litigants or the general public.
SEC. 2. Receiver. — In the event the court finds the application to be sufficient in form and
substance, the court shall issue an order: (a) appointing a receiver of known probity, integrity
and competence and without any conflict of interest as hereunder defined to immediately take
over the corporation, partnership or association, specifying such powers as it may deem
appropriate under the circumstances, including any of the powers specified in section 5 of this
Rule; (b) fixing the bond of the receiver; (c) directing the receiver to make a report as to the
affairs of the entity under receivership and on other relevant matters within sixty (60) days from
the time he assumes office; (d) prohibiting the incumbent management of the company,
partnership or association from selling, encumbering, transferring, or disposing in any manner
any of its properties except in the ordinary course of business; and (e) directing the payment in
full of all administrative expenses incurred after the issuance of the order.
SEC. 3. Receiver and management committee as officers of the court. — The receiver and the
members of the management committee in the exercise of their powers and performance of their
duties are considered officers of the court and shall be under its control and supervision.
SEC. 4. Composition of the management committee. — After due notice and hearing, the court
may appoint a management committee composed of three (3) members chosen by the court. In
the appointment of the members of the management committee, the following qualifications
shall be taken into consideration by the court:
(1) Expertise and acumen to manage and operate a business similar in size and
complexity as that of the corporation, association or partnership sought to be put
under management committee;
(2) Knowledge in management and finance;
(3) Good moral character, independence and integrity;
(4) A lack of a conflict of interest as defined in these Rules; and
(5) Willingness and ability to file a bond in such amount as may be determined by
the court.
Without limiting the generality of the following, a member of a management committee may be
deemed to have a conflict of interest if:
(1) He is engaged in a line of business which competes with the corporation,

association or partnership sought to be placed under management.
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(2) He is a director, officer or stockholder charged with mismanagement, dissipation

or wastage of the properties of the entity under management; or
(3) He is related by consanguinity or affinity within the fourth civil degree to any
director, officer or stockholder charged with mismanagement, dissipation or wastage
of the properties of the entity under management.
SEC. 5. Powers and functions of the management committee. — Upon assumption to office of
the management committee, the receiver shall immediately render a report and turn over the
management and control of the entity under his receivership to the management committee.
The management committee shall have the power to take custody of and control all assets and
properties owned or possessed by the entity under management. It shall take the place of the
management and board of directors of the entity under management, assume their rights and
responsibilities, and preserve the entity's assets and properties in its possession.
Without limiting the generality of the foregoing, the management committee shall exercise the
following powers and functions:
(1) To investigate the acts, conduct, properties, liabilities, and financial condition of
the corporation, association or partnership under management;
(2) To examine under oath the directors and officers of the entity and any other
witnesses that it may deem appropriate;
(3) To report to the court any fact ascertained by it pertaining to the causes of the
problems, fraud, misconduct, mismanagement and irregularities committed by the
stockholders, directors, management or any other person;
(4) To employ such person or persons such as lawyers, accountants, auditors,

appraisers and staff as are necessary in performing its functions and duties as
management committee;
(5) To report to the court any material adverse change in the business of the
corporation, association or partnership under management;
(6) To evaluate the existing assets and liabilities, earnings and operations of the
corporation, association or partnership under management;
(7) To determine and recommend to the court the best way to salvage and protect the
interest of the creditors, stockholders and the general public, including the
rehabilitation of the corporation, association or partnership under management;
(8) To prohibit and report to the court any encumbrance, transfer, disposition of the
debtor's property outside of the ordinary course of business or what is allowed by the
court;
(9) To prohibit and report to the court any payments made outside of the ordinary
course of business;
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(10) To have unlimited access to the employees, premises, books, records and
financial documents during business hours;
(11) To inspect, copy, photocopy or photograph any document, paper, book, account
or letter, whether in the possession of the corporation, association or partnership or
other persons;
(12) To gain entry into any property for the purposes of inspecting, measuring,
surveying, or photographing it or any designated relevant object or operation
thereon;
(13) To bring to the attention of the court any material change affecting the entity's
ability to meet its obligations;
(14) To revoke resolutions passed by the Executive Committee or Board of

Directors/Trustees or any governing body of the entity under management and pass
resolution in substitution of the same to enable it to more effectively exercise its
powers and functions;
(15) To modify, nullify or revoke transactions coming to its knowledge which it

deems detrimental or prejudicial to the interest of the entity under management;
(16) To recommend the termination of the proceedings and the dissolution of the
entity if it determines that the continuance in business of such entity is no longer
feasible or profitable or no longer works to the best interest of the stockholders,
parties-litigants, creditors or the general public;
(17) To apply to the court for any order or directive that it may deem necessary or
desirable to aid it in the exercise of its powers and performance of its duties and
functions; and
(18) To exercise such other powers as may, from time to time, be conferred upon it
by the court.
SEC. 6. Action by management committee. — A majority of its members shall be necessary for
the management committee to act or make a decision. The chairman of the management
committee shall be chosen by the members from among themselves. The committee may
delegate its management functions as may be necessary to operate the business of the entity
under management and preserve its assets.
SEC. 7. Transactions deemed to be in bad faith. — All transactions made by the previous
management and directors shall be deemed fraudulent and are rescissible if made within thirty
(30) days prior to the appointment of the receiver or management committee or during their
incumbency as receiver or management committee.
SEC. 8. Fees and expenses. — The receiver or the management committee and the persons hired
by it shall be entitled to reasonable professional fees and reimbursement of expenses which shall
be considered as administrative expenses.
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SEC. 9. Immunity from suit. — The receiver and members of the management committee and
the persons employed by them shall not be subject to any action, claim or demand in connection
with any act done or omitted by them in good faith in the exercise of their functions and powers.
All official acts and transactions of the receiver or management committee duly approved or
ratified by the court shall render them immune from any suit in connection with such act or
transaction.
SEC. 10. Reports. - Within a period of sixty (60) days from the appointment of its members, the
management committee shall make a report to the court on the state of the corporation,
partnership or association under management. Thereafter, the management committee shall
report every three (3) months to the court or as often as the court may require on the general
condition of the entity under management.
SEC 11. Removal and replacement of a member of the management committee. — A member of
the management committee is deemed removed upon appointment by the court of his
replacement chosen in accordance with section 4 of this Rule.
SEC. 12. Discharge of the management committee. — The management committee shall be
discharged and dissolved under the following circumstances:
(1)Whenever the court, on motion or motu proprio, has determined that the necessity
for the management committee no longer exists;
(2) By agreement of the parties; and
(3) Upon termination of the proceedings.
Upon its discharge and dissolution, the management committee shall submit its final report and
render an accounting of its management within such reasonable time as the court may allow.
RULE 10
PROVISIONAL REMEDIES
SECTION 1. Provisional remedies. — A party may apply for any of the provisional remedies
provided in the Rules of Court as may be available for the purposes. However, no temporary
restraining order or status quo order shall be issued save in exceptional cases and only after
hearing the parties and the posting of a bond.
RULE 11
SANCTIONS
SECTION 1. Sanctions on the parties or counsel. — In any of the following cases, the court
may, upon motion or motu proprio, impose appropriate sanctions:
(1) In case the court determines in the course of the proceeding that the action is a
nuisance or harassment suit;
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(2) In case a pleading, motion or other paper is filed in violation of section 7, Rule 1
of these Rules;
(3) In case a party omits or violates the certification required under section 4, Rule 2
of these Rules;
(4) In case of unwarranted denials in the answer to the complaint;
(5) In case of willful concealment or non-disclosure of material facts or evidence;
The sanctions may include an order to pay the other party or parties the amount of the
reasonable expenses incurred because of the act complained of, including reasonable attorney's
fees.
SEC. 2. Disciplinary sanctions on the judge. — The presiding judge may, upon a verified
complaint filed with the Office of the Court Administrator, be subject to disciplinary action
under any of the following cases:
(1) Failure to observe the special summary procedures prescribed in these Rules; or
(2) Failure to issue a pre-trial order in the form prescribed in these Rules.
RULE 12
FINAL PROVISIONS
SECTION 1. Severability. — If any provision or section of these Rules is held invalid, the
remaining provisions or sections shall not be affected thereby.
SEC. 2. Effectivity. — These Rules shall take effect on 1 April 2001 following its publication in
two (2) newspapers of general circulation in the Philippines.
Annex "A"
Republic of the Philippines

_________Judicial Region
Regional Trial Court
Branch____
NAME(s) OF PLAINTIFF/S,
Plaintiffs,
- versus - Case No. ______________
NAME(s) OF DEFENDANT/S,
Defendant/s.
x---------------------------x
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PRE-TRIAL ORDER
I. Summary of the Case
II. Preliminary Matters
A. Amendments allowed in the pleadings
B. Rulings on all objections to or comments on admissibility of any documentary or

other evidence
C. Other matters taken up in conference not covered by the subsequent items and
actions taken thereon.
III. Statement of the Facts
A. Admitted
B. Disputed.
1. Version of the Plaintiff
2. Version of the Defendant
IV. Issues to be Resolved
A. Factual
B. Legal
V. Applicable Laws
VI. Evidence for the Parties
All evidence to be adduced and presented by both parties shall be limited to those identified
below. All documentary evidence have already been pre-marked and copies thereof, after
comparison with the original, have been given the other parry or such party has been given an
opportunity to examine the same in cases when generating copies proves impractical. The
testimonies of the witnesses have all been reduced to affidavit form in accordance with these
Rules and copies thereof given to the other party.
No other evidence shall be allowed other than those indicated below except in accordance with
section 8, Rule 2 of the Interim Rules of Procedure for Intra-Corporate Controversies.
A. Evidence of the Plaintiff
1. Documentary Evidence
a) Document No. 1 (Exh. ____)
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(1) Name/Type
(2) Pre-Marking Number
(3) Summary
(4) Purpose
b) Document No. 2 (Exh.___)
(1) Name/Type
(3) Summary
(4) Purpose
(Additional documentary evidence shall be similarly presented)
2. Testimonial Evidence.
a) Name of First Witness
(1)Purpose of the testimony

(2) Estimated length of testimony
(b) Name of Second Witness
(1) Purpose of the testimony

3. Other Evidence
B. Evidence of the Defendant
1. Documentary Evidence
a) Document No. 1 (Exh. ____)
(1) Name/Type
(3) Summary
(4) Purpose
b) Document No. 2 (Exh.___)
(1) Name/Type
(3) Summary
(4) Purpose
2. Testimonial Evidence.
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a) Name of First Witness
(1)Purpose of the testimony

(b) Name of Second Witness
(1) Purpose of the testimony

3. Other Evidence
VII. Hearing Dates
(These hearing dates, which should be scheduled not later than thirty (30) days from the
completion at the pre-trial, shall be strictly followed and all postponements by either party shall
be deducted from such parry's allotted time to present evidence.)
A. Schedule of Plaintiffs Presentation of Evidence
B. Schedule of Defendant's Presentation of Evidence
Source: Supreme Court E-Library | Date created: August 26, 2015

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6/12/2020 [ A.M. No.

01-2-04-SC, March 13, 2001 ]

March 13, 2001, Manila

(Sgd.) HILARIO G. DAVIDE, JR.

(Sgd.) JOSUE N. BELLOSILLO (Sgd.) JOSE A.R. MELO

(Sgd.) REYNATO S. PUNO (Sgd.) JOSE C. VITUG

(Sgd.) SANTIAGO M. KAPUNAN (Sgd.) VICENTE V. MENDOZA

(Sgd.) ARTEMIO V. PANGANIBAN (Sgd.) LEONARDO A. QUISUMBING

(Sgd.) BERNARDO P. PARDO (Sgd.) ARTURO B. BUENA

(Sgd.) MINERVA P. GONZAGA-REYES (Sgd.) CONSUELO YNARES-SANTIAGO

(Sgd.) ANGELINA SANDOVAL-

INTERIM RULES OF PROCEDURE FOR

(2) Controversies arising out of intra-corporate, partnership, or association relations,

(3) Controversies in the election or appointment of directors, trustees, officers, or

(4) Derivative suits; and

(5) Inspection of corporate books.

(1) The extent of the shareholding or interest of the initiating stockholder

(2) Subject matter of the suit;

(3) Legal and factual basis of the complaint;

(5) Prejudice or damage to the corporation, partnership, or association in

SEC 8. Prohibited pleadings. — The following pleadings are prohibited:

(1) Motion to dismiss;

(2) Motion for a bill of particulars;

COMMENCEMENT OF ACTION AND PLEADINGS

SECTION 1. Commencement of action. — An action under these Rules is commenced by the

SEC. 4. Complaint. — The complaint shall state or contain:

(5) the relief sought.

In the answer, the defendant shall:

(5) State the law, rule, or regulation relied upon;

(6) Address each of the causes of action stated in the complaint;

(8) State any compulsory counterclaim/s and cross-claim/s; and

(9) State the relief sought.

(1.) Testimony of unwilling, hostile, or adverse party witnesses. A witness is

(3) Newly discovered evidence.

(2) Allegations expressly admitted, by either or both parties;

(3) Allegations deemed admitted by either or both parties;

(5) Amendments to the pleadings;

(7) Names of witnesses to be presented and the summary of their testimony as

(9) Specific proposals for an amicable settlement;

(10) Possibility of referral to mediation or other alternative modes of dispute

(11) Proposed schedule of hearings; and

(1) The possibility of an amicable settlement;

(2) Referral of the dispute to mediation or other forms of dispute resolution;

(4) Amendments to the pleadings;

(6) Objections to the admissibility of testimonial documentary and other evidence;

(7) Objections to the form or substance of any affidavit, or part thereof;

(8) Simplification of the issues;

(10) A complete schedule of hearing dates; and

No reply memorandum shall be allowed.

INSPECTION OF CORPORATE BOOKS AND RECORDS

(4) The suit is not a nuisance or harassment suit.

SEC 2. Discontinuance. — A derivative action shall not be discontinued, compromised or

SECTION 1. Creation of a management committee. — As an incident to any of the cases filed

(1) Dissipation, loss, wastage or destruction of assets or other properties; and

(2) Knowledge in management and finance;

(3) Good moral character, independence and integrity;

(4) A lack of a conflict of interest as defined in these Rules; and

(1) He is engaged in a line of business which competes with the corporation,

(2) He is a director, officer or stockholder charged with mismanagement, dissipation

(4) To employ such person or persons such as lawyers, accountants, auditors,

(14) To revoke resolutions passed by the Executive Committee or Board of

(15) To modify, nullify or revoke transactions coming to its knowledge which it

(2) By agreement of the parties; and

(3) Upon termination of the proceedings.